[London, 25th June 2023] – Ahead of its imminent sale, Manchester United’s enterprise value has been calculated at approximately £3.6 billion by Brand Finance, the world’s leading brand valuation consultancy. By contrast, the Glazer family are reported to be asking up to £6 billion for the club – meaning that buyers are at risk of over-paying by as much as £2.4 billion.
Hugo Hensley, Head of Sport Services, Brand Finance commented:
“While on paper this suggests that there is scope for overpayment by contenders for the takeover, Sir Jim Ratcliffe's INEOS group or Qatari billionaire Sheikh Jassim, there are several factors that justify the potential high cost for a buyer, all of which revolve around Manchester United's exceptional brand strength.”
According to Brand Finance's analysis, Manchester United boasts the fourth strongest brand in football and ranks among the world's top brands, with a Brand Strength Index (BSI) rating of 92.5/100 and an AAA+ rating. Man Utd’s brand value was calculated at £1.06 billion in Brand Finance’s Football 50 2022 ranking, and will be updated in the 2023 iteration of the report, due to be released on 6th June 2023.
Manchester United's £6 billion asking price is driven by its growth potential and ability to diversify revenue streams through broadcasting, sponsorship, and merchandise. In Women's football, a strong brand has enabled Man Utd to attract top players immediately and draw on an already huge fan base. In terms of building international revenues, Manchester United's global popularity, particularly amongst football fans in India and China’s growing middle classes, presents promising future opportunities to increase global reputation and cash-flows.
Owning a brand like Manchester United also offers additional benefits for potential owners. For example, it would enhance sponsorship and partnership opportunities, potentially offering the equivalent of £50-100 million spent on advertising annually. This is immediately relevant to Ratcliffe's INEOS group. Further, the scarcity value of globally leading brands like Manchester United, akin to rare art or collectors' items, adds prestige for buyers and commands a large premium.
However, it is the Soft Power, and nation brand benefits where Brand Finance sees the value start to possibly make sense. Leveraging the club's brand strength enables the creation of positive associations with a nation, leading to significant gains such as increased tourism, entertainment, and potential boosts to international trade and foreign direct investment. For buyers like Sheikh Jassim, who may have almost the full economic power of the Qatari state behind him, acquiring Manchester United aligns with Qatar’s strategy of using sport to introduce the relatively small nation to the world. The purchase could be seen as a small and reasonable addition to the estimated £200bn+ spent on hosting the 2022 Football World Cup and related infrastructure projects.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.
Brand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.